\chapter{Foundations}
\label{foundations}

\textbf{Responsible team member:} Pierre Babeck

This chapter describes the basics of the Business Model Canvas \citep[]{osterwalder2010business} generally. 
As well as the approach to create a business model by using the Business Model Canvas. 
Possibilities for evaluating are exposed still.

\section{Business Model Canvas}
\label{bmc}

The Business Model Canvas (BMC) is a framework which allows describing business
models. The BMC framework attaches great importance to a simple visual
representation. It allows to create a big pictures with the customer is in the
focus of the model. A BMC business model contains very little detail. 
It is an overview of the absolutely most important characteristics of a
company. The BMC is suitable for existing business models, as well as for the
development of new business models.

A BMC business model is comprised of nine segments
\citep[p.~16]{osterwalder2010business}. Each segment is associated with one
another.


\begin{enumerate}[1)]
  \item This Customer Segments \citep[p.~20]{osterwalder2010business} is the
  most important segment. It contains the audiences that a company wants to
  achieve. Without customers, a company may not survive. The business model is
  built on the basis of the customers that to be achieved.
  \item In the Value Proposition \citep[p.~22]{osterwalder2010business} segment
  products and services are described, belonging for the audience in the
  Customer Segment. It focuses on the benefits, possible solutions or the needs
  of a customer. But there are also values that can make a company unique.
  \item After the customers and the products are defined, follows the
  distribution channels \citep[p.~26]{osterwalder2010business}. The Channels
  segment explains how a company communicates with its customers and through
  which channels it wants to achieve this. This channel forms the interface
  between the customer and the company.
  \item The fourth segment, the Customer Relationships
  \citep[p.~28]{osterwalder2010business}, describes the relationship between
  the Customer Segments and the company itself. The relationships can be a
  personal nature or it can be also automated. The goal is the most: the new
  customer acquisition, customer loyalty to the company and the increase in
  sales. The Customer Relationships has great impact on customer satisfaction.
  \item So that a company can survive, the revenues are considered in the fifth
  segment. The Revenue Stream \citep[p.~30]{osterwalder2010business} segment
  includes all the revenue for each customer from the Customer Segments, which
  can achieve a company. Revenue may arise in two ways: continuous or one-time
  payments.
  \item The sixth segment, the Key Resources
  \citep[p.~34]{osterwalder2010business}, contains all essential resources. A
  resource is all what is needed to implement the business model. Resources are
  needed to create the Value Proposition for the customer or for the customer
  loyalty and ultimately for the revenue. Resources have different shapes.
  There are physical but also mental resources. A company can have, rent, or a
  partner can provide this.
  \item The main activities, the Key Activities
  \citep[p.~36]{osterwalder2010business}, are listed in the seventh segment.
  These include the activities which are necessary for the implementation of
  the business model. For example, the activities to make a product. Likewise,
  the main activities to take care of customers. Or the activities in order to
  achieve revenue.
  \item The main partners or the Key Partnerships
  \citep[p.~38]{osterwalder2010business} of a business model are represented in
  the eighth segment. Partner of a business model are mostly suppliers. This
  allows activities or resources to be outsource or open up new.
  \item Finally, the ninth and final segment shows the Cost Structure
  \citep[p.~40]{osterwalder2010business}. It consists of the costs incurred for
  the implementation of the business model. That is, it is considered to each
  segment and their cost listed. There can be one-time or ongoing costs.

\end{enumerate}

The BMC is because of his playful manner, excellent for startups and also for
investors. Because for them a business model is more important than a business
plan \citep[]{p2}.

A simple example of the visual appearance and the functioning of the BMC shows
the book "Business Model Generation" on page 105
\citep[p.~105]{osterwalder2010business}. It illustrates the business model of
Gillette. In the Customer Segments are the consumers. The company's products
are listed in the Value Proposition segments; there are blades and razors
handle. For the distribution of the products, the retail sector is listed in
the Channels segment. The products are therefore through the retail accessible
for the customer. In the Customer Relationships segment "BUILT-IN" and
"LOCK-IN" are listed. That is, by buying a shaver of this company the
customer must buy its blades. The business model of the company is further
clear in the segment of Revenue Streams. There is a one-time purchase of the
Shaver and frequent purchases of replacement blades. As important resources for
the business model patents and brand are listed in the Key Resources segment.
Without the patents and trademark the business model would not work. Customers
would maybe then buy needed razor blades from other companies.
The activities for the company to work; are marketing, research, development
and logistics. These are listed in the key activities segment. The production
of the products takes over a partner. Like as in the Key Partnerships segment
listed but also the retail belongs to the partners.


\subsection{Interviews}
\label{interviews}

Replying to simple and basic questions is necessary for creating business
models. For each segment of the BMC, there are typical questions. By answering
the questions, it yields the content of the segment. The creation of a BMC is
done by repeatedly iterate. It creates an initial model, which becomes concrete
through repeated interviews \citep[]{p2}.

Questions are used to identify the target audience for the Customer Segments
for example \citep[p.~21]{osterwalder2010business}: 

\begin{itemize}
  \item For whom, should a value or benefits are created?
  \item Who are the most important customers? 
\end{itemize}

Questions to identify the values for the Value Proposition are
\citep[p.~23]{osterwalder2010business}: 

\begin{itemize}
  \item What are the needs for a customer?
  \item What problems are solved for a customer?
\end{itemize}

Typical questions about the Channels can be
\citep[p.~27]{osterwalder2010business}: 

\begin{itemize}
  \item Through which channels will the customer be addressed?
  \item Which channels are best? 
\end{itemize}

Questions about the Customer Relationships that a company should ask themselves
can be \citep[p.~29]{osterwalder2010business}: 

\begin{itemize}
  \item What kind of relationship does expect the customer?
  \item How can the relationship expand and maintain?
  \item What relationship exists with a customer? 
\end{itemize}

Possible questions to get answers to the segment of revenue, can be
\citep[p.~31]{osterwalder2010business}: 

\begin{itemize}
  \item What is a customer willing to pay?
  \item How to pay a customer? 
  \item How important is any revenue for the overall result?
\end{itemize}

Questions about the Key Resources, can be \citep[p.~35]{osterwalder2010business}: 

\begin{itemize}
  \item What resources are needed for a product or a service?
  \item What resources are required for the Channels, Customer Relationships or for the
Revenue Stream?
\end{itemize}

To get answers to the Key Activities, you can ask \citep[p.~37]{osterwalder2010business}: 

\begin{itemize}
  \item What kinds of activities are necessary for the sales or Customer
  Relations?
  \item What activities are needed to create the Value Proposition?
\end{itemize}

Important questions about the Key Partnerships can be \citep[p.~39]{osterwalder2010business}: 

\begin{itemize}
  \item Who are the key partners or suppliers?
  \item What resources are available from partners?
  \item What kinds of activities are taken over by partners?
\end{itemize}

Ultimately a company must ask himself about the cost of the model. Any
questions are \citep[p.~41]{osterwalder2010business}: 

\begin{itemize}
  \item What are the main costs in the business model?
  \item Which resources or activities causing the most cost?
\end{itemize}




\subsection{Storytelling}
\label{storytelling}

The storytelling is a way to more accurately describe a created BMC. 
Innovative and new business models are often difficult understandable
\citep[p.~172]{osterwalder2010business}.
Through the storytelling, a business model should so explain to convince
potential investors \citep[p.~173]{osterwalder2010business}.
Thus, the basic logic of a business model seeks to recognize so that it is the
basis for a discussion \citep[p.~172]{osterwalder2010business}.

It is possible to tell stories to an existing business model or also for a
future model. Stories offer the possibility of justification for a change
\citep[p.~172]{osterwalder2010business}.

Mostly, the stories are fictitious and yet relate to the reality, but
especially to the business model. Stories show the relationships between the
various segments. And they can be told from different perspectives
\citep[p.~174]{osterwalder2010business}. This is the easiest way to ensure
clarity in a business model.


\subsection{Strategies for evaluation}
\label{strategies_for_evaluation}

The BMC framework serves only the creation and visualization of business
models. For more considerations, it is therefore necessary to examine a
business model with other frameworks. The detailed analysis of the environment is
important for a company. These include market forces, industry forces, key
trends and macroeconomic forces \citep[p.~200]{osterwalder2010business}.
Frameworks which can be easily combined with the BMC framework are the SWOT
analysis \citep[p.~216]{osterwalder2010business} and the blue ocean strategy
\citep[p.~226]{osterwalder2010business}.

With a SWOT analysis can be determined the strengths and weakness,
opportunities and threats. It combines an internal and external analysis. And it
serves the strategic planning and positioning. In combination with a BMC, is
developed for each of the nine segments appropriate questions and answers.
Therefore, its position can be set out and develop other options for a business
model.

The blue ocean strategy is a method to investigate the products or services, as
well as the customer segment. The BMC by its visual appearance is helpful.
